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On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and the world changed forever. Every industry and sector pivoted and flexed to meet the new normal. In the world of real estate, the changes were seismic. The pandemic ushered in an entirely new world of housing and real estate. Seasoned real estate developer and founder of Apennine Development Co., LLC, Michael Stortini, explains some of the most prevalent changes the real estate development industry experienced as a direct result of the pandemic.
The White Hot Residential Real Estate Market
The coronavirus pandemic had profound effects on the residential housing market. As workers ditched the office for work-from-home situations, house flipping and residential real estate investing spiked dramatically. In fact, real estate analytics firm CoreLogic noted that investors purchased 28% of single-family homes in the first segment of 2022, which set a record. Because of the increase in remote work, buyers wanted bigger homes in lower-cost areas. This increase in demand transformed the initial slump in home sales at the beginning of the pandemic into a blazing hot seller’s market.
Michael Stortini explains, “Buyers and investors were snapping up homes like crazy. Many buyers were waiving home inspections and paying significantly more than the asking price. When this was coupled with record low mortgage rates, it created the perfect opportunity for home flippers and home buyers alike.”
The Pandemic Has Advanced Industry Innovation
Virtual listings were a thing pre-pandemic. But after the pandemic, virtual listings became the norm instead of the exception. At the same time, technological advancements have made the buying and selling process faster and more convenient. Michael Stortini continues, “The new technologies that were already advancing the real estate purchase process have seen dramatically higher rates of adoption. This has made the closing process significantly faster. Banks are leveraging more automated loan underwriting tools to shorten timelines. Consider this, a few years ago, it may have taken two or several weeks to get an appraisal. Today, it’s a week or less.”
Trends in Commercial Real Estate
While the residential real estate market was white hot, the commercial market began to fizzle. Much of this change was attributed to the same factor that ignited the residential market — work from home. Because of the new work-from-home environment, commercial office spaces had to evolve to accommodate this new environment. Stortini explains his observations, “Many CEOs expressed concerns over workers spending less time in the office, resulting in reduced in-person collaboration, less innovation, reduced relationship building, and the erosion of business culture. However, this didn’t mean less footprint in the office space. It has meant a transformation in the configuration of office spaces.
Companies began shifting toward open spaces to encourage collaboration. Moving forward, we can expect more efficient, smarter designs with a larger focus on collaboration areas. Other innovations include more touchless features, enhanced cleaning protocols, and improved indoor air quality measures. ”
